BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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Complaint  Case No  : 675 of 2009

Date of Institution :  12.05.2009

Date of  Decision   :  13.04.2010

Gurmukh Singh, brother of Late Sh. Jagtar Singh, Resident of House No. 89, Village Sarangpur, Chandigarh.

 ……Complainant

V E R S U S

(1)     ICICI Bank, Branch Office Sector 9, Madhya Marg, Chandigarh, through its Branch Manager.

(2)     ICICI Prudential Life Insurance, Branch Office, Sector 9, Madhya Marg, Chandigarh, through its Branch Manager.

.…..Opposite Parties

CORAM:     SH.LAKSHMAN SHARMA              PRESIDENT

          SH.ASHOK RAJ BHANDARI       MEMBER

          MRS.MADHU MUTNEJA             MEMBER

PRESENT: None for Complainant.

         Sh. Sandeep Suri, Adv. for OP No. 1.

           Sh. G.S. Walia, Adv. for OP No.2

PER ASHOK RAJ BHANDARI, MEMBER

        Concisely put, Late Sh. Jagtar Singh– brother of the Complainant, in June, 2008, had taken a Car loan of Rs.15.60 lacs from OP No. 1 and in order to secure repayment of loan, in case of any mishappening, he took a Life Insurance Policy No. 09301968 from OP No.2 under “Credit Assure Plan”, by paying the 1^st premium of Rs.24,352/-, for a basic sum assured of Rs.15.60 lacs. The Complainant Gurmukh Singh was declared as nominee to the said Insurance Policy.  Unfortunately, during the currency of the aforesaid policy, the life assured – Jagtar Singh expired on 4.9.2009. Immediately, thereafter, the Complainant being the nominee of the insured, submitted his claim with the OPs and complied with all the formalities whatsoever asked for by them. But to her utter surprise and dismay, the OPs repudiated his well founded claim vide letter dated 30.1.2009, on the ground that the life assured at the time of proposal had suppressed the fact that he consumes alcohol; whereas the life assured died due to cardiac arrhythmia, which had no nexus with any of alleged personal statement of the insured. Hence, this complaint, alleging that the aforesaid acts of the OPs amount to deficiency in service and unfair trade practice. In the end, the Complainant has prayed for the following reliefs:-

a)  OP No. 2 may kindly be directed to pay the assured sum of Rs.14.45 lacs along with interest @12% p.a. from the date of filing of the claim and all other benefits which the Complainant is entitled to under the Policy.

b)  OP No. 2 may kindly be directed to pay Rs.1.00 lakh along with interest @24% p.a. as compensation to the Complainant on account of harassment due to the unfair trade practices and deficiency in service resulting in mental agony, harassment and humiliation suffered by the Complainant.

c)  Pay Rs.11,000/- towards the cost of the litigation. 

2]      Notice of the complaint was sent to OPs seeking their version of the case. 

3]      OPs No. 1 in its written statement, while admitting the factual matrix of the case/reply, pleaded that the policy of insurance taken by the deceased from OP No. 2 had no relationship with the loan availed from the OP No. 1. However, in case any payment was made, then the OP was entitled to the amount under the policy of insurance. It was asserted that as the original loanee had expired and the Complainant was not in a position to pay the installments due to the Bank, the Complainant should be directed to hand over the possession of the car to the Bank. The Bank as per the agreement and as per the general lien was entitled to the custody of the car. All other material contentions of the Complainant were controverted. Pleading that there was no deficiency in service on its part, a prayer has been made for dismissal of the complaint.

4]      OPs No. 2 in its written statement, while admitting the factual matrix of the case/reply, pleaded that the OP No. 2 had repudiated the claim under the policy in question by a speaking order, which lists out the specific reasons for the decision. Since the life assured died within 02 months of the inception of the policy, hence the matter was thoroughly investigated and it was revealed that life assured was a chronic alcoholic since 10 years and was on treatment with Cirrhogenic doses since 10 years and was also suffering Decompensated – Ascities, Encephelopathy prior to the issuance of policy. The life assured had concealed all these material facts which were necessary to disclose at the time of proposing for insurance, thereby rendered the contract of insurance void-ab-initio and inoperative and as such, the claim was rightly repudiated vide letter dated 30.1.2009. All other material contentions of the Complainant were controverted. Pleading that there was no deficiency in service on its part, a prayer has been made for dismissal of the complaint.

5]      Parties led evidence in support of their contentions.

6]      We have carefully gone through the entire case thoroughly, including the complaint and the relevant documents tendered by the complainant / OPs. We also heard the arguments put forth by the learned counsels for the Complainant and OPs. As a result of the detailed analysis of the case, the following points/issues have clearly emerged and certain conclusions/arrived at, accordingly:-

i]  The basic facts of the case in respect of the brother of the Complainant having taken a car loan in June, 2008, for an amount of Rs.15.60 lacs and also a Life Insurance Policy No. 09301968 from OP No.2 under “Credit Assure Plan”, by paying the 1^st premium of Rs.24,352/-, for a basic sum assured of Rs.15.60 lacs with Sh. Gurmukh Singh – the present Complainant appointed as a nominee, have all been admitted. It is also admitted that Sh. Jagtar Singh expired on 4.9.2009 i.e. within a period of 03 months from the date of issuance of the insurance policy. On the death of Sh. Jagtar Singh – the loanee of the car loan, the Complainant, who is the brother of the deceased, as well as nominee in the said insurance policy, lodged a claim with OP No. 2 for the payment of the death claim to him. The said claim was repudiated by OP No. 2 on 30.1.2009, on the ground that the life assured at the time of signing the Proposal Form had suppressed the fact that he was consuming alcohol during the period prior to the date of issuance of the policy. This has led to the present complaint.

ii] The only point of dispute between the parties is as to whether the repudiation of the death claim by OP No. 2 has been rightly done or not. Whereas the stand of OP No. 2, which is the main party in this case, has been that the life assured was a chronic alcoholic for the last 10 years and was on treatment with “Cirrhogenic Doses” during this period. In addition, he was also suffering from “Decompensated– Ascities, Encephelopathy”, prior to the issuance of the insurance policy. As per this OP, all these material facts were not disclosed by the Complainant at the time of signing the proposal form for the issuance of insurance policy and thereby, the whole contract of insurance became void-ab-initio, as well as inoperative and, therefore, the claim of the Complainant has been repudiated rightly by OP No. 2 on 30.1.2009. Apart from this, this OP has also denied all other allegations made by the Complainant.

iii] So far as OP No. 1 is concerned, it has been admitted and well established that it had granted a car loan to Sh. Jagtar Singh for a sum of Rs.15.60 lacs in June, 2008. It is also a fact that since the loanee – Sh. Jagtar Singh expired very shortly after taking the loan on 4.9.2009, the installments of the Car Loan could not be repaid to OP No. 1 after the death of the loanee and, therefore the deceased – Sh. Jagtar Singh became a defaulter in paying the loan. As per OP No.1, Late Sh. Jagtar Singh still owes a sum of Rs.18,04,138/- as the outstanding balance in his loan account. The role of this OP in the present case is very minimal, in the sense that it had granted a loan to Sh. Jagtar Singh, which was required to be re-paid in 60 monthly installments @ Rs.36,830/- each, after the disbursal of the loan to Sh. Jagtar Singh on 21.6.2008. As on 1.8.2009, 12 installments of Rs.36,830/- were already in arrears, apart from over due interest and cheque bouncing charges etc., payable by the loanee. There is no paper, document or any evidence to show that there is any linkage between the loan taken by Sh. Jagtar Singh from OP No. 1 and the insurance policy issued to him by OP No. 2. It is only the contention of the nominee of the insurance policy i.e. Sh. Gurmukh Singh – the brother of the deceased loanee that this insurance policy had been taken in order to secure the repayment of the loan. But this contention has not been substantiated by any other proof or document. All said and done, OP No. 1 has not much to do with the present complaint. The said dispute is entirely between Complainant and OP No. 2. 

iv]  So far as OP No. 2 is concerned, it says in its written statement/ affidavit that Sh. Jagtar Singh, the deceased life assured had concealed very material facts in respect of his health at the time of signing the proposal and taking the insurance policy. The very fact that the life assured had died within a period of 03 months from the issuance of the policy, led a thorough investigation of the case. In support of its case, this OP has cited Section 45 of the Insurance Act, in which it is provided that the life insurance policy may be called in question on the ground of concealment of material facts within a period of 02 years from the date of commencement of the Policy and in the present case, only a period of 03 months had passed and the life assured died within this period. It further says that it trusted the life assured, so much so that he was treated as a ‘Non-Medical Category’ case and the premium charged was only Standard (Ordinary). Had they known it to be a case of medical category, he would have been charged much higher premium and also put the life assured to various medical tests. The main focus of this OP is on the questions asked by it from the life assured, in the proposal form especially the question at Sr. No.(H)3, which was answered by the life assured as under:-

v]   The second point of defence taken by the OP is the records of the PGIMER, Chandigarh, obtained by the OP, where the life assured was admitted on 20.8.2008 and was subsequently, shifted to the Ward on 23.8.2008. The medical records of the life assured while he was being treated at the PGIMER from 8.8.2008 to 23.8.2008 has been reported to be as under:-

vi]  As per OP No. 2, the above stated medical record of the life assured clearly shows that he had a history of a chronic alcohol related liver disease and that he was very well aware of his medical status on the date of filling of the Proposal Form, as he was an educated, rich Property Dealer. Even the “Death Claim Intimation-cum-Claimant’s Statement – Credit Assure Plans” [Ex.C] issued by PGIMER, Chandigarh shows the death of the life assured on 14.9.2008, with the cause of death as under:-

“Cardiac Arrhythmia, Type I HRS, Chronic Liver Disease/ Decompensated.”

vii] Further, supporting its case, OP No. 2 has cited some authorities as under:-

           “(a) (2001) 2 Supreme Court Cases 160 –

Life Insurance Corporation of India and Others

---- Appellants

Versus

Asha Goel (Smt) and Another

----- Respondents

D. Insurance – Insurance Act, 1938 – S. 45 – Calling into question policy on ground of misstatement – Held, S.45 is restrictive in nature – Burden of proof lies on insurer to establish the circumstances mentioned in the section – However duty of the insured to disclose material facts continues up to the execution of the contract of insurance – Insured remains duty bound to disclose any material alteration in the character of the risk, which might occur in the period between the proposal and its acceptance.”

           “(b) AIR 1960 MADRAS 484 (V 47 C 163)

All India General Insurance Company Ltd. and Anr.

---- Appellants

Versus

S.P. Maheshwari

----- Respondent

Insurance Act (1938), S.45 – Life Policy – Material misrepresentation and non-disclosure of material facts – personal statement – Misrepresentation about drinking habit and non-disclosure of venereal disease – Insurance Company entitled to repudiate liability.”

Viii] The aforesaid authorities clearly indicate that the life assured was duty bound to disclose material facts in respect of status and condition of his health at the time of signing the proposal on account of the fact that the contract of insurance is a contract of utmost good faith, which has clearly not been done in the instant case.

ix]      Another contention of the Complainant in the present case has been that the life assured had died due to “Cardiac Arrhythmia”, which had no nexus with any of the alleged personal statements of the insured and, therefore, the repudiation of the death claim by OP No. 2 amounts to deficiency in service and indulgence in unfair trade practice on its part. In this respect, the total perusal of the medical history of the life assured, as well as the death certificate issued by the PGIMER, Chandigarh clearly show that the life assured had been suffering from severe liver disease on account of his chronic drinking habits during the last 10 years, so much so that even 8/10 days before his admission in the PGIMER, Chandigarh, he had indulged in drinking, which was in continuation of his old drinking habit during the previous 10 years. Not only he has been a chronic alcoholic, but also he had remained on “Cirrhogenic Doses” during this 10 years period. In addition to all this, he was also suffering from kidney problem as well. All this shows and proves that the life assured was suffering from not only from chronic alcoholism, but also a chronic liver disease and kidney problem, which eventually led to his death, as a result of heavy drinking continuously for a period of 10 years and also due to other related diseases/ problems.  

7]      In view of the above detailed analysis of the entire case, in our considered view, there is no deficiency of service or indulgence in an unfair trade practice on the part of the OPs, especially OP No. 2, as the brother of the Complainant himself was at fault in not disclosing very material facts about his health and the diseases he was suffering from. Even otherwise, no case is made out against OP No. 1, who had just sanctioned the car Loan to the life assured – Sh. Jagtar Singh and is now demanding the repayment of the loan installments. Therefore, there has been no deficiency of service on the part of OP No. 1 also. Further, it is quite clear that the repudiation of the death claim has been done rightly by OP No. 2 on very sound, valid, logical and legal grounds and we do not find anything wrong or amiss with this repudiation of the insurance claim.

8]      In view of the above, the present complaint has no basis, merit or substance and it deserves rejection. We, therefore, dismiss the complaint. However, respective parties shall bear their own costs.

9]     Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

13.04.2010                                       Sd/-

(LAKSHMAN SHARMA)

PRESIDENT

                                             Sd/-

(ASHOK RAJ BHANDARI)

MEMBER

                                            Sd/-

(MADHU MUTNEJA)

MEMBER

‘Dutt’